Rascal Corporation bonds have a 11.0% coupon and a maturity value of $1,000. The bonds, which pay interest semi-annually, had a maturity of 15 years. If you require a pre-tax return of 8.0% on bonds with this risk, how much would you pay for one of these bonds after 4 years?

Rascal Corporation bonds have a 11.0% coupon and a maturity value of $1,000. The bonds, which pay interest semi-annually, had a maturity of 15 years. If you require a pre-tax return of 8.0% on bonds with this risk, how much would you pay for one of these bonds after 4 years?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Question

Rascal Corporation bonds have a 11.0% coupon and a maturity value of $1,000. The
bonds, which pay interest semi - annually, had a maturity of 15 years. If you require a
pre- tax return of 8.0% on bonds with this risk, how much would you pay for one of
these bonds after 4 years?

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